Whose taxes are about to go up?

Ethan: The Legislature finally appointed the committee that is supposed to find $40 million by eliminating corporate welfare … I mean, special interest loopholes … I mean, “tax expenditures” to balance the budget.

Phil: Don’t you love that the government calls our ability to keep our own money an “expenditure”!? Only a politician or George Orwell could come up with that term.

Ethan: Whether the government pays you through a contract or a tax break, it is still a payment.

Phil: As my favorite liberal, I’ll give you a pass about how we first decided to spend that money, so you can now say it is payment.

Ethan: So how about we pretend we are the committee tasked with finding the $40 million?

Phil: My understanding is that the committee must repeal $40 million in tax relief, or the dough will be cut from municipal revenue sharing. Don’t we have more than $1 billion of these “expenditures” on the books somewhere?

Ethan: Indeed, we do. From “animal bedding” to “jet fuel” to “self-help books on alcoholism” to the “stores on ships,” we have a million of ‘em!

Phil: And don’t forget vending machines that sell the same candy bar your local store sells. And someone from out-of-state who buys a boat. And those fancy haircuts, I mean “hairstyling,” for your people in downtown Portland. They all pay nothing in sales tax.

Ethan: Did you know that the meat you buy in a store is not taxed, but, if they put it in a sandwich, it is? Or if you buy an ice cream sandwich at the corner store it isn’t taxed, but a soft serve at Dairy Queen is?

Phil: The list is endless. Lawyers, accountants and other service professionals don’t have to charge sales tax.

Ethan: Well, not to make it too uncomfortable, but neither do you financial service guys.

Phil: Don’t start picking on me, Mr. CEO of a Nonprofit That Pays No Sales, Income or Property Tax.

Phil: And I’m not? Fact is, I have to pay taxes before you can even receive government grants that meet your payroll. But that’s the point, isn’t it? Every one of these industries says they are doing something good for the community. And many claim they’ll go out of business if the exemption they have is lifted.

Ethan: Welcome to legislating. So, what should they do about it?

Phil: First, get ready for the, “Don’t tax me, and don’t tax thee. Tax that man behind the tree!” song and dance to begin.

Ethan: You mean the paper companies, ski resorts, pharmaceutical industries, movie makers, bowling alley owners, and Bath Iron Works will all be there to say, “Don’t tax me”?

Phil: Yeah, those folks along with the universities, hospitals, pensioners, college tuition savers and a parade of others will be there saying, “Don’t tax thee,” either. So, here’s the reality: The committee needs to suit up and get on the field playing offense. They need some Tom Brady-esque surgical strikes that gain short yardage.

Ethan: Or they could throw it deep to David Tyree like my man Eli Manning of the New York Giants and find the big money from corporate welfare, also known as Pine Tree Zones and the Business Equipment Tax Rebate. Eliminate those, and we all go home. Budget balanced.

Phil: OK, now that you’ve thrown out all the red meat for your press conferences and your loyal supporters (and reminded me of my most stinging defeat as a die-hard Patriot’s fan), it’s your turn to tell us how the tax committee gets the job done.

Ethan: At the beginning of every meeting, Sen. Anne Haskell, D-Portland, committee chair, must announce, “We are calling to order the committee assigned with preventing an increase in property taxes.” Because if they fail, property taxes will rise. In the end, their decision is simply to decide which is better for our economy and our middle class: a property tax increase or eliminating special interest tax loopholes.

Phil: I suppose that is correct — since Democrats have taken spending cuts off the table.

Ethan: Republicans did as well, big guy. Republicans as well.

Phil: Don’t remind me.

Ethan: Then, they should go through all 197 deductions, credits, reimbursements and subsidies in our tax code, one by one by one, and determine what value each expenditure brings the state.

Phil: You sure know how to have a good time.

Ethan: And then they should vote on each and every one. Hold every member of the committee accountable for each loophole. Should it stay, or should it go?

Phil: I like it. I would add one more layer. If the first-round vote is not at least seven of the 12 members saying to keep it in, it goes on the pile for possible elimination.

Ethan: And once the committee is done with the first round, go back through and raise the bar further. Now if someone wants to put the loophole back in the code (I mean if they want to raise property taxes by that amount), they will need eight of the members to keep it in.

Phil: This could be like the BRAC Commission. Then your final vote on the entire package would need nine of the 12 to kill the package. And if the package is killed, then lock the doors, and say we aren’t leaving until we have a new one.

Ethan: Your BRAC analogy is apropos, as our tax code is as politically perilous as closing military bases, but the only way to do it is to be courageous and tough.

Phil: Let’s hope this committee is both.

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Weekly Updates

Each week on Friday a new column written by both Ethan and Phil will be posted here on their blog. Additionally check this site out often for other snippets and video footage of the two of them debating the issues.

About the Authors

Ethan Strimling served in the Maine State Senate as Chair of the Labor Committee, Criminal Justice Committee, and the Homeland Security Task Force, while also serving on Taxation for six years. Prior to, he ran a national PAC focused on electing young leaders and provided policy analysis to Maine US Congressman Tom Andrews. He is currently the CEO of LearningWorks, a not-for-profit providing learning opportunities for at-risk youth, the immigrant community, and low-income families. He also serves as a Senior Political Analyst for WCSH/WLBZ TV and for WGAN radio.

Philip Harriman is the former Chairman of the Yarmouth Town Council and four term State Senator. During his Senate terms he was the ranking Republican on the Appropriations, Health and Human Services, Utilities & Energy and Natural Resources Committees. Harriman is a co-founder of Lebel & Harriman, LLP, a business succession, retirement and estate planning firm located in Falmouth, Maine. He has been in the financial planning profession for over 30 years, starting with former Maine Governor James B. Longley's life insurance agency in 1978. He is the host of Inside Maine heard on 560WGAN News Radio and delivers political opinion and analysis for WCSH & WLBZ the NBC television affiliates in Maine.